Wednesday, April 16, 2008

When In Doubt, Do Nothing

It's depressing that this Congress really is incapable of doing the right thing.

The Senate proclaimed a fierce bipartisan resolve two weeks ago to help American homeowners in danger of foreclosure. But while a bill that senators approved last week would take modest steps toward that goal, it would also provide billions of dollars in tax breaks — for automakers, airlines, alternative energy producers and other struggling industries, as well as home builders.

Sen. Christopher J. Dodd, Democrat of Connecticut, was the main author of the Senate bill meant to help homeowners.

The tax provisions of the Foreclosure Prevention Act, which consumer groups and labor leaders say amount to government handouts to big business, show how the credit crisis, while rattling the housing and financial markets, has created beneficiaries in the power corridors of Washington.

It also shows how legislation with a populist imperative offers a chance for lobbyists to press their clients’ interests.

What won't be in the bill is a provision allowing bankruptcy judges to modify loan terms for primary residences, like people can for vacation homes and investment properties.

I'm fine with carving out a special bankruptcy exception for the standard 10% down 30 year fixed rate loan, but crazy "exotic" mortgages should go before the judge like everything else.